IBM Allows Free Access to Patents

Big article in today’s New York Times about IBM and patents (free registration required). Specifically, IBM has decided to give away rights to some of its patents. As I’ve mentioned in this space before, IBM received over 3,000 patents last year and collects more than $1 billion a year in revenue from its intellectual property. From the article:

Earlier this year, IBM made a broad gesture toward what it called a new era in how it controls intellectual property. It announced in January that it would make 500 patents—mainly for software code that manages electronic commerce, storage, image processing, data handling and Internet communications—freely available to others.

And it pledged that more such moves would follow.

This month, the company said that all of its future patent contributions to the largest standards group for electronic commerce on the Web, the Organization for the Advancement of Structured Information Standards, would be free.

It is important to note what IBM is and is not making available. All of the free patents are for potential standards, or other technologies that would facilitate communications between multiple computers. In other words IBM will not share patents for mainframes, database software or any of the stuff that it makes money on. This is an important distinction because it is the same one the European Union is likely to make when it decides whether or not to allow software patents sometime this year. The EU is expected to rule that software that works on one computer can be patented, but software that runs between computers, i.e., software that is designed to facilitate communication across and between networks, will remain open since it helps foster interoperability.

Before moving on to some analysis I want to highlight a few quotes from IBM execs.

• Jim Stallings, vice president for intellectual property and standards: “When you open some of your technology, it forces you to run higher up that economic food chain in your business.”
• John E. Kelly, senior vice president: “The layer of technology that is open is going to steadily increase, but in going through this transition we’re not going to be crazy. This is like disarmament. You’re not going to give away all your missiles as a first step.”
• Kelly: “It seemed to us the pendulum has swung way too far in the direction of companies blindly chasing patents, and blindly chasing the enforcement of patents.”

Call me cynical, but I don’t think that the last quote means that IBM is doing this because it wants the tech industry to join hands and sing Kumbaya. Patents are a good business, and the only reason that Big Blue would give its intellectual property away was if it thought it might be better business. I imagine IBM believes this will help its technology become the standard, which presumably would translate into sales of the higher-end products that Stallings mentioned. If you can think of more reasons please list them in the comments section.